Dubai is the historic trading hub in the Middle East and Africa and the most business-friendly city in MEA with simple import/export policies and no trade barriers. Due to its strategic location and well developed shipping sector, the city currently hosts several international trading, freight and shipping companies. Dubai also boasts highly developed logistics and transportation infrastructure, making the city a perfect choise for product distribution. Furhermore, the city allows duty free exports to 17 Middle Eastern countries which encourages foreign investors to opt for offshore company formation in Dubai.
|Population:||2.657 million (UAE: 9.27million)|
|Form of government:||Absolute monarchy Emir: Mohammed bin Rashid Al Maktoum|
|Official & spoken languages:||Arabic (+English in Business)|
|Time zone:||GET (UTC+4)|
|GDP (PPP):||US 82.9 billion|
|GDP (PPP)/per capita:||US 24,866|
|Average salary:||AED 140,379 (USD 38,000/year)|
|Major trading partners:||Iran, India, Saudi Arabia, Oman, and Switzerland Suplliers: China, United States, India, Germany and Japan|
Free-trade zones in the United Arab Emirates are areas that have a special tax, customs and imports regime and are governed by their own framework of regulations (with the exception of UAE criminal law). The UAE has several free zones across Dubai, Abu Dhabi, Sharjah, Fujairah, Ajman, Ras al Khaimah and Um Al Qwain. Free zones may be broadly categorized as sea port free zones, airport free zones, and mainland free zones. Free-trade zone exemptions are:
Each Free Zone is designed around one or more business industry categories and only offers licenses to companies within those categories. An independent Free Zone Authority (FZA) governs each free zone, and is the agency responsible for issuing FTZ operating licenses and assisting companies with establishing their business in the FTZ.
Investors can either register a new company in the form of a Free Zone Establishment (FZE) or simply establish a branch or representative office of their existing or parent company based within the UAE or abroad. An FZE is a limited liability company governed by the rules and regulations of the Free Zone in which it is established. Except for acquiring nationality in the UAE, the provisions of the Commercial Companies Law (CCL) do not apply to FZEs, provided that the Free Zones have special provisions regulating such companies.
List of Dubai Free-Trade zones
|Overall rank 2018:||rank 26th (change in rank: 0)|
|– Starting a business:||rank 53 (average processing time 1 days)|
|– Dealing with construction permits:||rank 4 (no change) – average processing time 49 days|
|– Getting electricity:||rank 4 (average installation time 28 days)|
|– Registering property:||rank 11 average processing time 1.5 day|
|– Getting credit:||rank 101 (change -4)|
|– Protecting minority investors:||rank 9 (change +39)|
|– Paying taxes:||rank 1 (average company tax from profits 15,9%, average time used for taxation 12 hours per year)|
|– Trading across borders||rank 85 (change -1)|
|– Enforcing contract:||rank 25 (average 495 days, average cost from standing amount 20,1%)|
|– Resolving Insolvency:||rank 104 (Average processing time: 3.2 years)|
The tax-free haven of the Emirate of Dubai is gaining more and more popularity among the representatives of private businesses and individual entrepreneurs, who wish to live and work in a comfortable environment with minimal tax payments. It is not a secret that the features of the jurisdiction provide the exemption from both income taxation of private persons and corporate taxation of companies. There are no taxes on income, taxes on income from capital, taxes on the selling of the properties, inheritance taxes and etc.
Due to such specifics, the jurisdiction of Dubai competes successfully with the traditional tax havens all around the world. As a nice bonus for private business there is the possibility to optimize the taxable base at the international level via international taxation agreements. Moreover, the jurisdiction is not included in the “black” offshore lists of the international organizations which fight against money laundering.
Advantages that are provided in the United Arab Emirates by the tax resident status:
Rates for different activities are as follow:
UAE does not have any federal income tax. An income tax decree has been enacted by each Emirate, but in practice, the enforcement of these decrees is restricted to foreign banks and to oil companies.
First of all, it is necessary to list the documentation which may be required for obtaining a residence visa, in particular:
This set of documents is standard and can be extended depending on each specific situation.
Ways to obtain a residence visa in Dubai:
There are several simple but effective ways to obtain a tax resident status in Dubai, in particular:
Each of these methods has its own peculiarities and requirements. Let’s consider in more detail the most popular ones.
Obtaining a visa via registering a local company:
This method can be divided into several sequential steps, which include the following operations:
It should be noted that the registration of a company on the local market of the United Arab Emirates – it is the opportunity to obtain an investor visa for owners and work visa for employees. Besides the main advantages of this method one can include the fact that to obtain visa in UAE it is not necessary to carry out real economic or commercial activity in the territory of the Emirate. In other words, you can register a local company only for the purpose of obtaining a visa for yourself and for members of your family.
Obtaining a visa via acquisition of the immovable property on the territory of the Emirate
The real estate market of the United Arab Emirates shows a relative stability and is a little bit subjected to the external influences and global financial crises. These particular indicators have provided the inflow of the foreign investors and large-scale development of building in Dubai. Experts say that real estate in Dubai, regardless of the category, has a stable tendency to rise in price, what makes it a great investment tool.
Foreign citizens are allowed to purchase real estate of any category and class in Dubai. The only restriction is the specialized territories, where such transactions are permissible. Land lots of these categories can be acquired only by citizens of the country. All the other property possesses a “Freehold” status. In fact these are almost all new areas, which are allocated for investment construction.
The real estate market of the Emirate of Dubai is ready to offer both the apartments of economy class, and luxury dwelling on the coast. It all depends on your wishes and financial possibilities.
Changes in the current legislation became an important addition to the purchasing of property in UAE by foreign citizens, and in particular it is the introduction of a state Register of testaments. If in the past, the foreign businessmen, who invested in Dubai real estate, were anxious due to the fact that hereditary right was governed by the Shariah, today the situation is different. Registration of a testament in the country register allows the owner not to worry about who will obtain the property after his death, and the rights of heirs are protected at the legislative level.
As to the obtaining a tax resident status via the purchasing of real estate, there are certain conditions which are required to be fulfilled. In particular, the purchased real estate property must cost at least 1 million Dirhams, and the monthly income of the applicant for obtaining visa must be at least 10 thousand Dirhams. Those who meet the stated requirements, are granted a residence visa for one year with the possibility of further extension.
|Overall rank 2018:||56th (59/100 points)|
|– Property rights:||55/100 points|
|– Freedom from taxes:||95/100 points|
|– Freedom of speech/religion:||25/100 points|
|– Limited government:||76/100 points|
|– Gun rights:||38/100 points|
|– Drug rights:||10/100 points|
|– Freedom from corruption:||70/100 points|
|– Freedom from inflation:||81/100 points|
|– Business freedom:||80/100 points|
|Taxable income:||0%/20%55% There are no taxes imposed on the income of companies, except for oil and gas exploration and production companies and branches of foreign banks.|
|Taxation of dividends:||–|
|VAT registration:||A business must register for VAT if its taxable supplies and imports exceeds AED 375,000 per annum (USD 100,000). It is optional for businesses whose supplies and imports exceed AED 187,500 per annum.|
|– VAT Rates:||The standard rate is 5%, for more information please visit: https://government.ae|
|Alternative minimum tax:||No|
|Withholding tax (general):||–|
|– From Dividends||No|
|– From Royalties||No|
|– From Interests||No|
|– Technical services||No|
|Capital gains tax:||Capital gains are taxable as business income at the regular corporate income tax rate.|
|Real property tax:||5 percent (All property owners must pay 5% of the average rental value in their area)|
|Social security:||The UEA does not impose social security taxes on foreign employees. Employer pension contributions for national employees are 12.5% of the “contribution calculation salary”. In addition, national employee contributions are levied at 5% of the contribution calculation salary.|
|Tax treaties:||The UEA has concluded around 60 income tax treaties|
|– Transfer pricing||No|
|– Thin capitalization rule||No|
|– Disclosure requirements||Annual financial statements must be filled with the Ministry of Commerce by companies and branches located outside the free trade zones. Entities located within a free trade zone report to the free zone authority of the relevant zone. These entities have never officially been requested to file or report financial statements to any ministry/authority located outside the free zone.|
Compliance for corporation:
There are no compliance obligations on companies in the UEA
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Incorporation services in Dubai, UAE
Company administration in Dubai
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Additional business services in Dubai (by Novasigma Certified Partners)
Some of the common domestic accounting services we provide in Dubai include
Value Added Tax (VAT)
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Legal services in Dubai for all Novasigma Clients including companies and their owners and directors
Our team of lawyers, associates and legal advisers to assist our clients with a business and tax planning, overseas business operations, risk management and other legal matters. Primarily focused on business transactions, Novasigma Accounting & Law corporate attorneys are a great asset to a small and large businesses. With a background on corporate law, our corporate lawyers and legal advisers have an in depth knowledge on the transactions that may put your business at risk of litigation. These include contracts and negotiations, taxation laws, business structuring, buy/sell agreements, and intellectual property, among others.
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